On December 13, 2023, CoinList Markets LLC (“CoinList”) agreed to pay $1,207,830 pursuant to a settlement agreement with the Office of Foreign Assets Controls (“OFAC”) in connection with allegations that the San Francisco based virtual currency exchange violated OFAC’s Russia/Ukraine sanctions by allowing users in Crimea, an embargoed country, to open accounts on its platform.Continue Reading Sanctions Enforcement in the Cryptocurrency Industry Continues to be a Focus

The U.S. authorities are increasingly taking actions against big-name crypto mixers for potential violations of sanctions regulations. On November 29, 2023, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) sanctioned Sinbad.io (“Sinbad”), which is a virtual currency mixer. As a result, U.S. persons are generally prohibited from dealings involving Sinbad or its property interests. Virtual currency mixers are anonymized software tools that allow users to conceal the source or owner of digital assets.Continue Reading OFAC Sanctions Crypto Mixer Following Allegations of Laundering Funds to North Korea

On May 1, NYDFS settled with a cryptocurrency trading platform over the company’s cybersecurity deficiencies, resulting in a consent order and $1.2 million fine for the crypto company. NYDFS alleged “multiple deficiencies in the Company’s cybersecurity program” discovered during NYDFS examinations in 2018 and 2020. The examinations prompted an investigation, ultimately leading to the consent order and the fine.Continue Reading New York Settles with Crypto Company, Proposes Crypto Legislation

On May 3, 2023, New York Attorney General Letitia James introduced legislation that, if passed, would substantially increase oversight and regulation of the cryptocurrency industry in New York. James touts the bill as the “Crypto Regulation Protection, Transparency and Oversight Act,” also to be known as the “CRPTO Act.” (the “Bill”).Continue Reading NYAG Bill Seeks to “Bring Order” to Crypto Industry

The Securities Exchange Commission (“SEC” or “Commission”) has taken action against Genesis Global Capital, LLC (“Genesis”) and Gemini Trust Company, LLC (“Gemini”) (collectively, “Defendants”) in a recently-filed complaint alleging that the crypto companies violated federal securities laws by engaging in the unregistered offer and sale of securities in the form of their “Gemini Earn Agreements.” In doing so, the Commission not only relied upon the mainstay Howey Test for determining whether an agreement is a security, but also summoned Howey’s lesser-known cousin, the Reves Test, notably leading with the latter in its complaint.Continue Reading SEC Showcases Lesser-Known Legal Theory in Crypto Lending Suit

We have previously posted about the SEC lawsuit against LBRY. In that post, we noted that while the crypto community is rightfully focused on the Ripple case to see how the SEC will fare in court on enforcements alleging cryptocurrency offerings are a security, a lesser-known case may provide clarity first. And today that came to be. The federal district court in the LBRY case granted summary judgment in favor of the SEC. In so ruling, the Court found no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not have a triable defense that it lacked fair notice.
Continue Reading Federal Court Rules LBRY Offered Security and Rejects Arguments SEC Did Not Provide Fair Notice

On September 26, 2022, New York Attorney General Letitia James (the “NYAG”) took definitive action in the wake of her warning last year that crypto lending platforms must register with her office or face legal action, filing a complaint against Nexo Inc. and Nexo Capital, Inc. (collectively “Nexo”) alleging that Nexo violated New York’s Martin Act and Executive Law by acting as an unregistered securities and/or commodities broker-dealer within the state. Specifically, the complaint alleges that Nexo improperly offered and sold securities and commodities by allowing users to purchase, sell, deposit, trade, borrow against, and earn interest on virtual currency, while unregistered. The complaint further alleges that Nexo made various misrepresentations regarding its operations. The NYAG seeks an injunction, disgorgement, restitution, and a permanent bar prohibiting Nexo from purchasing or selling securities or commodities in New York.
Continue Reading NYAG Delivers on Promise to Rein In Unregistered Crypto Lending with New Suit

While the crypto community is rightfully focused on the Ripple case to see how the SEC will fare in court on enforcements alleging cryptocurrency offerings are a security, a lesser-known case may provide clarity first. The SEC’s suit against LBRY is scheduled for trial in September 2022.

Continue Reading Securities and Exchange Commission V. LBRY; Is Your Crypto Project Illegal?